Senior Armenian and Russia officials inaugurated over the weekend Armenia’s first-ever tax-free business zone which is supposed to mainly cater for high hi-tech manufacturing companies.

The Free Economic Zone is located in the premises of an electronics plant and a research institute in Yerevan that were handed over to Russia, along with several other Armenian enterprises, a decade ago in payment for Yerevan’s $100 million debt to Russia. It will be managed by the Armenian branch of the Russian microelectronics company Sitronics.

Prime Minister Tigran Sarkisian’s and Russia’s visiting Transport Minister Maxim Sokolov underlined the tax haven’s importance to their governments by attending the opening ceremony. Sarkisian, who also co-chairs a Russian-Armenian inter-government commission on economic cooperation together with Sokolov, welcomed the “landmark event.”

The two officials also held separate talks in Yerevan to discuss ways of boosting bilateral commercial ties. “It can be stated that Russian-Armenian relations are dynamically developing,” Sarkisian was reported to tell Sokolov.

An Armenian government statement said that the tax-free zone covering around 10 hectares of land and office space is designed for companies specializing in information technology, engineering, telecommunications, renewable energy and pharmaceutics. They will be exempt from profit, value-added and property taxes as well as import duties.

The government hopes that this privileged business environment will help to attract more foreign investment to Armenia, create new jobs and boost exports, according to the statement.

The tax haven might also breathe a new life into the two Yerevan enterprises placed under Russian ownership in 2003. They both have continued to operate at a fraction of their capacity since then.

Armenia was expected to open two years ago a similar tax-free zone for agricultural products at the premises of Yerevan’s Zvartnots international operator managed by Eduardo Eurnekian, an Argentine billionaire of Armenian descent. It has still not been set up, however.